São Luiz to invest up to US$ 444 million in expansion
Valor Econômico
After a break of nearly a year, the São Paulo group São Luiz resumes the project of having a national network of hospitals. In order to do so, it is examining eight places in the country, three of which in the State of São Paulo. The idea is to invest, in the next five years, something between R$ 600 million (US$ 333 million) and R$ 800 million (US$ 444 million) in acquisitions or construction of new hospitals. "We are analyzing the most feasible sites. There may be eight hospitals or less, depending on the viability of those sites. In some places, we are already negotiating the purchase of land", says Denise Soares dos Santos, President of São Luiz.
The funds may come from the company's own cash, from bank financing or from partnerships with builders, which would erect the hospital building on a "build-to-suit" system. The initial idea of São Luiz for the process of expansion was to raise the money on an IPO. However, that project was aborted because the Brazilian legislation does not allow the participation of foreign capital in hospitals.
The President of São Luiz denies the group is for sale or that it has made negotiations. "I got here a year ago and I have heard such rumor countless times", says Denise. "It is a good rumor in the sense that São Luiz has made a very interesting work that probably bothers many people. We are not for sale", said the President. Denise highlighted the controlling shareholders remain in the Administrative Council and that the Board is fully professionalized.
The Executive says the Anália Franco unit, which demanded investments of R$ 140 million (US$ 77.8 million), has an occupancy rate of 75% and it has already achieved its break-even point in the first year of operations. A hospital normally gets to its break-even point between the third and fifth years of activity. In 2009, Anália Franco had earnings of R$ 150 million (US$ 76.1 million). The São Luiz group as a whole closed 2009 with earnings of R$ 680 million (US$ 345.2 million). Of that amount, R$ 300 million (US$ 152.3 million) came from the Itaim unit, R$ 200 million (US$ 101.5 million) of the Morumbi hospital, R$ 150 million (US$ 76.1 million) from Anália Franco and the other R$ 30 million (US$ 15.2 million) from the São Luiz health care plan. Such health care plan is no longer being sold.
The R$ 680 million (US$ 345.2 million) revenue represents growth of nearly 20% compared to 2008. According to Denise, the net profit last year amounted to R$ 28.3 million (US$ 14.4 million), nearly three times more than compared to the R$ 9.8 million (US$ 5.4 million) registered in 2008. This year, São Luiz is investing R$ 75.8 million (US$ 42.1 million). Of that total, nearly R$ 40 million (US$ 22.2 million) will be reverted to the Itaim hospital that will gain 40 new beds. The difference will be invested in technology and other improvements in the other units.